Working with 720p h.264 files

Is my Mac supposed to be able to work directly with 720p h.264 files? Macbook Pro 2,33 Ghz with 2 gig RAM...
From my limited testing, I have seen extremely slow scrubbing with the previously mentioned files.
I was thinking of buying a Elgato turbo.264 HD for importing video from my Canon HF11... but I don't think its worth it, if working with the video is so slow...
Any suggestions would be appreciated

h.264 is primarily a playback format. It is designed to be highly compressed, yet give high quality pictures. It is similar to AVCHD in this regard. AVCHD uses h.264 internally.
The way h.264 compression works is the [Group of Pictures compression technique|http://en.wikipedia.org/wiki/Groupofpictures], where for every full frame, there are, say, 24 frames of highly compressed information. For example, imagine a video of an eagle flying. You get one full frame of the eagle flying. The next 24 frames say, "background is the same, but shifted over to the left, eagle's wings are moving up and down, etc."
When you import AVCHD, iMovie converts all these partial frames to full frames in the Apple Intermediate Codec. You can do the same thing for h.264 by using a free tool like MPEG Streamclip. You can drag your h.264 file into streamclip and export as AIC full frames.
This makes it much easier to edit.

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